THE WALMART EFFECT

Walmart-owned Jet is acquiring cool, quirky ModCloth to target millennial shoppers

Obsession
Fashion
Obsession
Fashion

For more than a decade, women’s fashion retailer ModCloth has provided cool, quirky clothing in a wide range of sizes. The apparel startup’s fun, inclusive approach has helped it build a loyal following of female shoppers.

That loyalty may soon be put to the test. On Wednesday (March 15), Jezebel reported that the indie e-tailer is being acquired by Jet.com, an Amazon competitor that was itself purchased by Walmart last summer.

Jet is investing in fashion at a moment when Amazon—already the top online clothing store for millennials—is positioning itself to become the largest apparel retailer in the US. In January, Jet acquired ShoeBuy.com, a rival to Amazon subsidiary Zappos.

With ModCloth, Jet is targeting a younger audience. According to a report from e-commerce data firm Slice Intelligence, more than half of ModCloth’s customers are millennials, an age cohort that also accounted for the largest share of online apparel sales in 2016.

The deal may also be a needed one for ModCloth. While the retailer’s sales were soaring as recently as 2013—and a big expansion planned even more recently—employees told Jezebel that ModCloth has faced six rounds of layoffs in the past two and a half years. In a meeting with employees on Wednesday, CEO Matthew Kaness characterized the Walmart acquisition as an opportunity for the company to grow.

But fans of the indie retailer were less enthused. Although Walmart and Jet have remained separate brands, ModCloth loyalists were already worrying on Wednesday that the company will lose its independent spark.

As noted by Jezebel, organizational differences between ModCloth and Walmart could also be problematic. The former has been praised for making fashion accessible for women of all sizes, the latter criticized for its tone-deaf approach to sizing. ModCloth founder Susan Gregg Koger wrote a blog post about the company’s support of the International Women’s Day strike and gender equality; Walmart has been sued for gender discrimination and accused of worker abuse and insufficient pay. At an even more basic level, ModCloth is an online operation (despite a few brick-and-mortar locations), a space where Walmart is still playing catch-up.

Quartz has reached out to ModCloth, Jet, and Walmart for comment and will update with any responses.

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